The Hindu Business Line : Geojit Securities arm forays into commodities trading

``We will be the first stock broking firm in the country to enter into the realm of commodity futures trading,'' Mr C.J. George, Managing Director of Geojit Securities Ltd, told reporters here on Thursday.

Leveraging on its strength in the capital and derivatives markets, the company expects to do well in commodity futures, which is finding increasing acceptance in the Indian context.

The company has taken membership in the National Multi Commodity Exchange of India Ltd (NMCEIL), and the First Commodity Exchange of India Ltd (FCEIL), Kochi, which trades in coconut oil futures. NMCEIL is India's first demutualised multi-commodity exchange and the first commodity exchange in the country that is solely an online exchange.

Geojit has also applied for membership at the pepper exchange in Kochi, managed by IPSTA and is hopeful of getting membership soon.

To start with, the company will trade in coconut oil futures from next week onwards which is expected to benefit the producers and traders in Kerala, as well as industrial consumers in places like Mumbai, Ahmedabad etc.

There are several soap and cosmetic manufacturers in Western India who would be keen to have a clean and transparent trade with producers and traders in Kerala. ``But the real market will open up when we start trading in rubber futures,'' Mr George said. There is sufficient volumes and organised demand for rubber from major industrial producers who would want to leverage on the price mechanism.

The first stage in augmenting and facilitating commodity trade was achieved when physical deliveries were dispensed with. Instead of physical deliveries, today commodity futures is based on Central Warehousing Corporation receipts, which has made deliveries much more simple and easy.

``Geojit will source orders for commodities futures trading through its extensive branch network,'' Mr George said. This will provide access to farmers and traders across India to commodity futures trading.

``As a leading securities broker in India, Geojit's large branch network, higher end technology adoption and domain knowledge in derivatives will help deepen the commodities futures market also,'' Mr Kailash Gupta, Managing Director of NMCEIL, pointed out.

NMCEIL has licence to trade in 35 commodities and uses electronic trading system.

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